Axis Bank acquires FreeCharge for Rs 385cr

FreeCharge finally has a buyer– Axis Bank. Axis Bank’s board has entered into a share purchase agreement with Jaspers Infotech Private Limited which runs Snapdeal to buy 100 percent stake in its payments subsidiary Freecharge in an all cash deal worth Rs 385 crore, the bank said in a communication to the Bombay Stock Exchange (BSE).

Notably, the Axis-FreeCharge deal size is significantly lower from the $400 million (Rs 2,500 crore approx) that Snapdeal had paid to acquire the payments firm in 2015 in what was then the largest startup deal in India.

“This acquisition is expected to help the bank take a significant step towards digital distribution of financial products. The platform provides access to agile customer-facing technology, which will help the bank to serve its existing customers better and approach new digitally native customers in an efficient manner,” the companies said in a joint statement.

According to RBI regulations, any bank can have one license for a prepaid payments instrument (PPI) like FreeCharge. Since Axis Bank already have a PPI license, the lender have to surrender one of the licenses. But Axis Bank will retain the FreeCharge brand, according to the company.

Apparently, the deal will provide some cash flow for Snapdeal which is still in talks with rival Flipkart for a takeover. Snapdeal’s board has reportedly approved Flipkart’s revised bid of up to $950 million.

The deal is expected to close in the next two months. FreeCharge competes with Alibaba backed Paytm and claims to be having 50 million registered wallet users and over 2,00,000 merchants.